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Shaping the Future of European Payments: PSD3 & FiDA
The Payment Service Directive (PSD3), Payment Service Regulation (PSR), and Financial Data Access Regulation (FiDA) are set to reshape the European payment services market, driving growth and innovation. This Insight Page explores FiDA's expected pivotal role in open finance.
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Unveiling the significance and goals of FiDA
What is FiDA?
On June 28, 2023, the EU Commission published its payment and financial data access package as part of which the proposal for a Financial Data Access Regulation (FiDA) was published.
FiDA will create a unified framework at the EU level for regulated and consent-based sharing of financial data, categorized into personal and non-personal data.
Key Pillars of FiDA
- Establish rules for accessing, sharing and using specific types of customer data in financial services
- Set guidelines for the authorization and operation of financial information service providers
- Grant consumers and businesses the right to authorize data users to utilize their financial data
- Promote the development of financial products that can be more personalized and create innovative business models
- Improve and implement new security and privacy standards
- Almost all financial services data is in scope across the financial industry
- Address the needs of the digital economy and remove barriers in the data market
Timeline Expectations
- The first draft was published in 2023 and needs to find its way through the EU legislative-making process.
- Upon approval, the regulation will apply 24 months after it comes into force - expected effect in 2025.
Exploring Financial Data – Scope of FiDA
FiDA covers a wide array of customer data, offering valuable insights and detailed information to support various business needs and strategies.
Data Sharing
The below diagram illustrates how secure data transfers are expected to take place under FiDA. Customers must have access to a permission dashboard to manage and monitor their data, giving them complete control who has access to their data and for what purpose.
Regulatory Context – Europe fit for the digital age
FiDA emerges within a regulatory framework already filled with many standards collectively designed to govern the entire payments/financial sector comprehensively.
- PSD3: Focuses on payment services, enhancing customer protection and creating a level playing field for payment service providers.
- GDPR: Sets standards for data protection and privacy across the EU.
- DORA: Aims to ensure the operational resilience of financial institutions.
- PSR: Focuses on payment systems regulation to ensure transparency and security.
- Data Act: Addresses the use of data and its availability across sectors.
The intersection of FiDA and GDPR: intricately linked in their mission to safeguard customer data
FiDA complements GDPR, providing additional data access rights and ensuring data processing security. The innovations will therefore be purely operational and will merge into the mandatory activities that will be managed by the privacy team and the data protection officer.
FiDA and Financial Innovation
FiDA is positioned to drive Open Finance by establishing clear guidelines amidst the emergence of new digital technology-enabled providers in payment services, especially those offering 'open banking' services. While broader 'open finance' solutions beyond payments have been emerging, they have faced challenges due to the lack of defined regulatory frameworks. These solutions often rely on accessing data through interfaces set up by data holders for their customers, like the early stages of 'open banking' before the revised Payment Services Directive.
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Implications for Financial Institutions and Consumers
As any new regulation, FiDA brings along implications for financial institutions and consumers. Operational adjustments need to be implemented for data access and consent management and new data categories may have to be specified for mandatory sharing.
Overall, FiDA:
- Strengthens digitalization and fosters innovation, as third parties can offer new applications and tools
- Gives consumers more control over their data so it can be used for their benefit
- Facilitates a transparent and secure financial data ecosystem, enhanced protection for both consumers and financial institutions
- Enables monetization of shared data by data holders through a regulated framework
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How can Sia Partners help?
At Sia Partners, we are dedicated to supporting financial institutions to navigate the evolving landscape shaped by FiDA and Open Finance. Here’s how we can assist:
- Open Finance Value Proposition: We help organizations capitalize on Open Finance opportunities by leveraging our expertise in developing innovative financial products and services. Our strategic insights enable clients to enhance customer engagement and drive business growth through expanded data-driven solutions.
- Compliance and Data Privacy: With a deep understanding of regulatory frameworks like FiDA and GDPR, we ensure compliance readiness. Our tailored solutions mitigate risks associated with data handling, protecting consumer trust while adhering to strict regulatory requirements.
- Data Monetization Strategies: We collaborate with clients to unlock the value of their data assets responsibly. Our data monetization strategies are designed to maximize revenue potential while maintaining ethical data practices and enhancing customer satisfaction.
By partnering with Sia Partners, financial institutions can navigate the complexities of Open Finance confidently, ensuring sustainable growth and resilience in the digital era
